After seven years in the wilderness, the Summit County real estate market is just now approaching “normal”.
This year the number of closings will return to the 20-year average and the average sale price will be near the historic peak.
After a relatively slow July when sales only equaled the average number for July and fell short of the number sold in July 2014, it appeared outside forces might derail our best year since 2007. It’s still not clear if that will happen, but as of October 1, activity has not dropped off very much. If the tea party doesn’t shut down the US government again and the stock market only swings 1000 points per week, we may get out of this year in fair shape.
Through the first 3 Quarters of 2015, 15 percent more properties had sold than in 2014 to date. August alone brought 11 percent more sales than last August. The market is on pace to sell 2200 properties this year, about 150 more properties than the 20-year average. That would be the first time it has reached or exceeded the average since 2007.
Make no mistake, about 700 more properties must close in the 4th Quarter and if the market stops cold, that won’t happen. With about 300 properties under contract waiting to close, however, a big part of the job is done.
Prices have been recovering as well and the average price is now over $530,000 for the first time since 2010. The average of $535,000 is only about $34,000, or 6 percent, lower than the peak average of $568,971 that came in 2008.
More generous appraisals and many cash sales have allowed prices to rise faster beginning in the 3rd Quarter. Cash sales create higher priced comparable sales than a lender would allow if an appraisal were required. Once a property, in a complex of town homes for instance, sells for a significantly higher price than previous sales, the entire complex has a comparable sale to point to for the appraisal that might be needed.
Lenders are slowly returning to the mortgage market as interest rates increase. When we ask why they are just now getting back into the mortgage business, it’s been a hoot to hear them protest that they never left!
Residential properties are selling for an average of 96.6 percent of list price and taking an average of 175 days to sell, about 8 percent faster than last year. The last time we saw sales this close to list price was about eight years ago.
Breckenridge averaged the highest price per square foot in Summit County at $421. Wildernest/Silverthorne averaged the lowest at 267 psf.
Properties sold fastest in Dillon taking an average 123 days while Copper averaged the most days on market at 397.
Frisco prices averaged 97.6 percent of list, the highest in the County while Copper Mtn. averaged the lowest at 93.9 percent.
Overall, Breckenridge average prices were the highest in the County at $734,000, Copper Mountain averaged the lowest at $357,400. Frisco was the second highest, Wildernest/Silverthorne the third highest beating out Keystone at number four and Dillon finished at number five.
Keystone showed the greatest appreciation rate increasing by over 30 percent from 2014, after having the lowest average price in the County in 2014. Frisco came in second with a gain of about 20 percent after about five flat years.
The most interesting development is an inventory that continues to decline from already historically low levels.
At the beginning of October, just over 1100 properties were on the market. A normal number is more like 1700.
Owners who bought in 2008 or so are continuing to wait for a return to the prices they paid for their properties… plus some profit. That means about 5000 owners who would normally be getting ready to sell after the typical number of years are holding off.
Others who want to move up to another property won’t sell before they find a replacement. With nothing for sale, that is difficult. Hence a log jam of pent-up seller activity.
As prices increase, this situation will sort itself out. The long slow climb back to normalcy continues.
Archives for October 2015
After seven years in the wilderness, the Summit County real estate market is just now approaching “normal”.
Although land continues to lag the recovery experienced by all other segments of the Summit County real estate market, the news is not all bad. More land is selling in a shorter amount of time and prices have stopped dropping. But the land market is still depressed.
Through September, 108 vacant sites were sold as opposed to last year through September when 87 had sold.
Average prices are up by about $125,000 to $455,000, but influenced by seven sales between $1 million and $10 million which happened largely in the Breckenridge area.
Leaving the ten million dollar sale aside, the realistic average sale price drops to $314,750, about $10,000 lower than last year when only 3 lots had sold for over a million by October 1 and none higher than $1.9 million.
Days on market have dropped from an average of 500 last year to “only” 358 this year and the average sold price has increased to 90% of list.
So why are high dollar land sales accelerating this year? Because well-heeled cash buyers are taking advantage of a three-year supply of land at bargain prices while the condition lasts. The last, best parcels for individual homes or development of multiple trophy residences are being snapped up right now.
The next wave will bring buyers for the lower priced lots in prestigious neighborhoods like Highlands at Breckenridge and Three Peaks. In these neighborhoods large numbers of lots are available for about half the original prices of when they were first subdivided in the late ‘90’s and early 2000’s.
But that next wave won’t come until lenders begin to participate in the land and construction markets again. When spec building becomes possible for builders without the cash to carry the whole project, land sales and prices will skyrocket once again.
That’s because Summit County is essentially out of raw land for new subdivision. What little vacant land we’ve got now is all there will be unless Congress decides to sell off the National Forest.
If you’ve been thinking about building, now is the time before large supply, low demand and bargain prices are gone.
Most Homeowner associations in Summit County are well run, but buyers still need to investigate and satisfy themselves that the one they are considering is in good shape. Realtors in Colorado use the Colorado Real Estate Commission approved contract that included an absolute right to terminate if a buyer finds the HOA unacceptable for any reason.
Here’s an article from the September 2015 National Association of Realtors Magazine by Jill Schweitzer, associate broker at RE/MAX Fine Properties in Scottsdale, Ariz., author of “Buying Into an HOA With Your Eyes Wide Open!”
“What’s the difference between a good, mediocre, and downright bad homeowner association? It’s not entirely a matter of opinion. There are specific items to look at and questions to ask that can tell you whether you’re buying into an HOA that will only give you headaches. This information is particularly important in condominiums, where the HOA usually is responsible for maintaining the exterior of the buildings.
While this isn’t intended to be legal advice and there may be other items to look at other than those mentioned in this article, this should give you ideas for what to pay attention to when dealing with HOAs.
Look at the Community as a Whole
Is it run-down? Don’t solely focus on the one property you are purchasing. When the HOA is responsible for maintaining the buildings, check out neighboring units and common spaces along with the home you are purchasing. Here are some telltale signs of an HOA that isn’t on top of its responsibilities:
• Are the building signs in disrepair?
• Does the asphalt look like gravel?
• Are the pool and other amenities clean and in good working order?
• What is the age and condition of the roofs?
• Do the buildings need to be painted?
• Are there staircases and balconies in poor shape that the HOA is responsible for maintaining?
• Are there problems with siding?
• Are there grading issues causing flooding?
Look at the Reserve Study
First of all, make sure you know what this is. A reserve study details an HOA’s long-term funding plan, showing, most important, how much it currently has to offset maintenance costs. It’s the most important tool to determine the financial health of the HOA.
• What is the percent funded? Zero percent to 30 percent means it’s at high risk of a special assessment; 31 percent to 70 percent is a medium risk; 71 percent to 100 percent is low risk.
• How much does the reserve study recommend the HOA saves each year, and how much is the HOA actually saving?
• Has the HOA been following the reserve study and making capital improvements?
• How much money can you foresee being needed compared to what the HOA has saved?
Proactively Ask Questions
Call and ask the HOA management company or Officers of the HOA Board questions. Keep these questions in mind:
• Have there been any special assessments before? Get the details and ask if there is discussion about having another one.
• Have there been any lawsuits or are any expected? Check court records.
• How many insurance claims has the HOA had?
• If roofs are an HOA responsibility, are there plans to transfer the burden to the owner? How many roof repairs have there been in the last couple years?
• Are there plans to change the HOA’s covenants, conditions, and restrictions?
• Have there been any repairs from extensive water damage in the last couple years?
You must review the HOA’s covenants, rules, meeting minutes, violation policy, collection policy, and other aspects.
Any HOA problems are not going away by keeping our eyes closed. The first step in improving HOAs is having real estate professionals who will educate buyers on how an HOA should operate.
Buyers need to be involved and concerned with the HOA business that they are becoming a part of before closing — and they need to stay involved after closing.”
Lots of good points here. But remember that all of these properties are aging. While most HOA’s keep adequate reserves for roof, heat system or other large capital expenses, no HOA has planned ahead 40 years for exterior redesign or renovation.
Eventually every one of them has to assess for modernization and this has generally run to $20,000 or so per unit in Summit County properties that have done this. But it usually results in sale prices increasing by about what the assessment cost.
Talk to the HOA officers. They won’t pull any punches and you’ll find out what’s in the works pretty quickly.
So will it dump or not this winter?… a record El Niño is heating up the water in the Pacific this year and that could mean really big snow… or not. The only thing meteorologists agree on is that this is record El Niño and that SOMEONE will get dumped on. But it could miss any given area by 50 miles or 250 miles. Call your bookie now to get down on the over-under for this year.
While Summit County is busy building apartments and schools on the former airport property in Breck… Aspen is enlarging their airport to accommodate even more billionaires’ Gulfstream jets. The goal is to allow direct bizjet flights from Paris or other spots 7000 miles away. Coulda been us… we’re stuck with just the multi-millionaires.
The latest CDOT brainstorm is a new Lexus lane on I70… to avoid being stuck with the 99%’ers in the other 2 lanes. At high traffic times, this lane uses 10 miles of shoulder as a toll lane costing between $3 and $30 to guarantee patrons at least 45 miles per hour. So what becomes of this lane when it’s not being tolled? And do we have to dress to use it? Wash the car? Buy a new car? So many questions…
On the other hand, not using a WWII howitzer to blast Loveland Pass avalanches any more makes sense… and CDOT is installing a remote blasting system to do just that. Now instead of hurling high-explosives at the hill, they’ll just hit the button on a computer and create a propane and air explosion under the snow any time, day or night. CDOT workers, who occasionally get injured with the guns, will really appreciate this. Now if they could just get some stripes on the roads…